Cost of capital is often a contentious issue in utility ratemaking. This is due, in part, to the inexact nature of the tools available to financial analysts and the considerable room for divergent...
The Wires Charge: Risk and Rates for the Regulated Distributor
percent equals 11.5 percent. By late July, however, the rate had fallen to about 6.4 percent. For the sake of simplicity, calculations here will assume a rate of 6.6 percent.
9This division, in particular, will be subject to intense scrutiny and debate. The particular numbers do not change our basic argument, but do highlight the need for additional research into this matter.
10According to 1995 FERC Form 1 data, major investor-owned utilities had a capital structure of 47 percent debt, or a D/E ratio of 0.9.
11See Maloney, McCormick, and Mitchell, op. cit., note 4.
12Based on 1995 consumption.
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